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Tighter Supplies Ahead in EU but Limited Price Support

EU - The reduction in the EU pig breeding herd recorded in the year to June 2016 is expected to lead to some reduction in supplies over the coming months, according to UK levy board AHDB Pork.

However, uncertainty about future export prospects and subdued EU consumer demand may prevent prices rising any further. These were among the conclusions drawn from this week’s meeting of the EU Commission’s pig meat forecasts working group.

As reported last month, the number of breeding sows in the major EU producers in June was 4 per cent lower than a year before. The total number of pigs was also down year on year. As a result of this, total pig slaughterings are expected to be lower in the second half of this year and the first half of 2017 before starting to recover towards the end of next year.

The working group also forecasts prices. Here there is more uncertainty but the general view was that prices would fall seasonally between now and early next year, a trend which has already begun. However, they are expected to remain comfortably above the low levels recorded last winter. The EU may have less of an easy rise on export markets next year and domestic demand is still subdued.

Therefore, forecasts suggest that seasonal price gains from the spring onwards may be more modest next year than in 2016. Despite starting the year well above this year’s level, prices are not expected to reach the same peak and are forecast to fall below 2016 levels in the second half of the year.